Over the last three trading days, the index had swung drastically in both directions – at least 10 pts or so from the day-low to the day-high. And over the last two sessions, the index gapped down by more than 5 pts at the opening. Every single early pullback experienced by the market over the last three sessions was followed by concerted effort to bounce back above the flat line. Nevertheless, the index still ended lower over the last two sessions.
Technically, what we can depict from the market action over the last three days is that the market is in a state of confusion. Those with a bearish bent expect further weakness ahead as the index had already violated the uptrend line which had previously supported its uptrend for more than 6 months. Moreover, it still looks like the index could be creating a potential downtrend channel. On the other hand, there are many bargain hunters who like to accumulate shares on seeing the FBM KLCI drop by more than 10 pts.
Our view remains the same - that as long as the market remains stuck within the potential downtrend channel that we have drawn, this means there is still a possibility that the index may be forming a downtrend channel, especially since it has already created a lower high and lower low.
While watching if the index is in the midst of creating of a downtrend channel, we are sticking to our Neutral view. Do not forget that the index is now trading at below the uptrend line.
From the current level, there is still immediate support at the 1,505 pt-level, followed by the 1,500 ptpsychological level. To the upside, there is initial resistance at the 1,524-1,536-pt area.
Technically, what we can depict from the market action over the last three days is that the market is in a state of confusion. Those with a bearish bent expect further weakness ahead as the index had already violated the uptrend line which had previously supported its uptrend for more than 6 months. Moreover, it still looks like the index could be creating a potential downtrend channel. On the other hand, there are many bargain hunters who like to accumulate shares on seeing the FBM KLCI drop by more than 10 pts.
Our view remains the same - that as long as the market remains stuck within the potential downtrend channel that we have drawn, this means there is still a possibility that the index may be forming a downtrend channel, especially since it has already created a lower high and lower low.
While watching if the index is in the midst of creating of a downtrend channel, we are sticking to our Neutral view. Do not forget that the index is now trading at below the uptrend line.
From the current level, there is still immediate support at the 1,505 pt-level, followed by the 1,500 ptpsychological level. To the upside, there is initial resistance at the 1,524-1,536-pt area.
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